“No taxation without representation” was one of the slogans that sparked the Revolution in America. It was one of many that our founding fathers began during the 1750s and 1760s because the colonists did not believe they were being represented in the British Parliament. Well now, it seems that is the cry again as Congress is looking to propose taxation on online businesses who don’t have a representation in a state where new legislation may require that they be tax collectors for that state. While I would expect this from liberal Democrats, sadly many GOP Congressmen and Senators are on board with online taxation.
While businesses in a state are required to collect taxes for that state, something that I personally believe they should be compensated for, since in essence the state is forcing them to be a tax collector, online companies that do not have a presence in a state do not have to collect sales tax for states they do not have a physical presence in.
Since the ruling by the Supreme Court in Quill v North Dakota twenty years ago, online retailers have been free to carry on business without collecting sales tax for states they are not in.
However, big companies, like Amazon are leading the charge that other online retailers should be collecting sales tax. They are giving the same argument that Wal-mart gave against them and now they are adding that new technology makes online tax feasible for small businesses. But that is not the point.
The point is “no taxation without representation,” not is it easier now for small business to report sales tax. For those who are not following along here, if a company doesn’t have a physical presence in a state, they cannot be adequately represented when it comes to taxes and legislation. Therefore, they could theoretically be taxed whatever the state wanted to tax them, then they pass it on to the consumer and the state reaps all the benefits because the online business collects money for them at no cost.
This is not just about sales tax on online business. It’s about more tax on the American people. In the end, if the online business sells nothing, they owe nothing. However, once they make a sale they are not the ones actually paying sales tax. You and I are. Remember that. When taxes are talked about, it’s always individuals that are taxed, not corporations, companies or other businesses.
In an interview with the Daily Caller, Steve DelBianco, president of NetChoice, a group that opposes online sales tax legislation, said:
“The Quill ruling exists for a reason: to protect businesses from regulation and taxation by states where they have no voice or vote. Congress should not sweep aside the Quill standard unless and until the states are held to true simplification and robust protection for small businesses.”
DelBianco is exactly right on this. However, proponents of tax legislation claim this is not a new tax, but just a new way to collect taxes. The reality is, it’s a new tax. If I’m selling widgets online and I sell across state lines into Georgia, currently I don’t have to collect sales tax for Georgia and the person who bought it doesn’t have to pay sales tax for their item in my state. If tax legislation changes, I’ll have to charge a new tax, the customer pays the new tax and then I have to pay to send the tax in to a state I’m not even represented by.
One of the proponents of such legislation is a man who is a sheep farmer in New York, Sten Wilson. Wilson had trouble with state taxes because he actually went to other states for trade shows.
“Everyone thinks they are saving money by not paying tax on their plasma screen TV but they are paying ten-fold on their property tax bill because now it’s mandatory,”Wilson said. “One way or the other, the schools, roads, infrastructure, state medicare, everything has to be covered.”
“I see the impact of this, and I don’t think people are really looking at the whole picture,” he continued. “What’s getting reported is that you are going to pay more tax on your Internet purchases, well, you are already supposed to pay that tax.”
“Everyone says that this is going to cost small business money, but what it actually does is it saves businesses money … because it completely automates the sales tax process,” Wilson concluded.
While Mr. Wilson did have a tough time with taxes, I’d say maybe he should start his own online trade show so that he doesn’t have to get involved with those sales taxes. His comments have to be the silliest things I’ve heard. If you are online and don’t have a physical presence in a state you don’t pay sales tax and you don’t have to do paperwork for that. Easy enough. His claim that it would save online businesses money is absolutely ridiculous. Those that have not been collecting and then paying to send the money in, will now be forced to do so. Also, they will have to get the software that he’s talking about, which will cost them money.
The internet is a great place for small business and entrepreneurs. Should Congress want to pass legislation for online sales, they will not encourage business on the internet. They will kill what is already there. Maybe Congress and state governments should look at cutting their wasteful spending so they won’t have to look for every conceivable means of getting into our wallets.Don't forget to Like Freedom Outpost on Facebook and Twitter, and follow our friends at RepublicanLegion.com.